A company has a turnover of SEK 15,000,000. The supplier credit period is on average 28 days. The annual purchases of goods etc. amounts to SEK 9,000,000. Accounts receivable amount to SEK 1,250,000 on average. Cash and cash equivalents account for 6% of sales. The inventory averages SEK 1,500,000. The management's goal is to reduce the working capital requirement by SEK 250,000. The finance department believes that the goal can be achieved by reducing inventory to an average of SEK 1,400,000, extending the average supplier credit period by two days and shortening the average customer credit period by 3 days. Is it true? Points require both motivation and that all calculations are reported.

A company has a turnover of SEK 15,000,000. The supplier credit period is on average 28 days. The annual purchases of goods etc. amounts to SEK 9,000,000. Accounts receivable amount to SEK 1,250,000 on average. Cash and cash equivalents account for 6% of sales. The inventory averages SEK 1,500,000. The management's goal is to reduce the working capital requirement by SEK 250,000. The finance department believes that the goal can be achieved by reducing inventory to an average of SEK 1,400,000, extending the average supplier credit period by two days and shortening the average customer credit period by 3 days. Is it true? Points require both motivation and that all calculations are reported.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 1P

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Similar questions

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